Beware of the National Infrastructure Bank

September 7, 2010

Beware of any proposal containing the phrase “public-private-partnership”. P cubed as it’s known in policy making circles is almost always a device to increase the wealth and power of the already wealthy and powerful.

Barack Obama proposed yesterday to create a National Infrastructure Bank that will pool public and private funds for the development of all forms of infrastructure. The idea has been floating around for the past few years and was proposed by Senator Dodd back in 2007, yet another reason to be suspicious. The New York Times notes that “the concept has lately been gaining traction in policy circles and on Capitol Hill.” This is not at all surprising given the enormously powerful interests which will benefit. Leave no doubt this is one Obama program which will pass.

The bank is yet another attack on the average American’s quality of life, a part of the larger war that’s been waged incessantly during the past four decades. During this time and under bipartisan leadership, wages have declined, pensions have disappeared, insecurity has greatly increased, and social security has been increasingly threatened. The wealthy few have meanwhile been living as royalty. The Infrastructure Bank will be a key institution in the furtherance of this process. Roads, buses, trains, and virtually all infrastructure will become private operations driven by a return on investment / profit logic that will provide enormous opportunities for big business.

The Times article states the bank will operate like the World Bank – a sad but telling comparison linking the development of the United States to that of poverty stricken clients of this global institution that’s failed so miserably in achieving its mission. According to the article, “the outside investors would expect a competitive return on their money, so many of the completed projects would have to charge fees, taxes or tolls.” It quotes Democratic congresswoman DeLauro who is developing a bill as saying she would be “looking at a broader base, meaning the bank would finance not just roads and rails, but also telecommunications, water, drainage, green energy and other large-scale works.”

Here’s the vision from the Urban Land Institute: “The likely future funding course involves raising revenues from more and higher user fees tied directly to providing necessary investment capital for infrastructure systems, rather than reliance on general taxes, which distort and hide costs from the public.”

Obama’s proposal is radical and regressive. It will change the funding method for infrastructure from taxes, which are at least modestly progressive and income based, to regressive user fees. It’s essentially a consumption tax but with the added cost of corporate profits. There is an alternative. We could finance infrastructure through far higher taxes on wealth and through direct money creation. The fact that these options are not on the table clearly shows where we are heading within the overall global corporate paradigm.